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Innovation in healthcare and producing “Predictable Winners” — in conversation with Stuart Jackson and Ilya Trakhtenberg of L.E.K. Consulting

Stuart Jackson and Ilya Trakhtenberg of L.E.K. Consulting are on a mission to demystify the process of innovation. 

In an exclusive interview ahead of their breakfast session at HBI 2025, the authors of the forthcoming book “Predictable Winners” share insights on why so many innovations fail, and how healthcare organisations can fire up what they call the “innovation engine”, and beat the odds.

 

What are the challenges for healthcare companies looking to innovate and engage in transformation?

For healthcare organisations implementing digital tools and workflows, AI applications or new ways to provide care, the barriers to success often prove formidable.

Trakhtenberg points to the human element as perhaps the most critical factor, while also acknowledging misalignment between reimbursement structures and innovation. If innovation is to succeed, it is vital that new technologies and opportunities are sympathetic to existing workflows, and can be utilised and provide value within reimbursement frameworks. 

“The complexity, and the way we think about it with many of our clients, is that anything that requires behavioural change among providers is an uphill battle — so change management is a huge issue,” he explains. 

“There are also greater complexities that are involved with reimbursement — introducing a new technology that adds cost but doesn’t increase reimbursement is always a struggle. That’s why a lot of the AI solutions that are being pitched today struggle, because they cannot figure out how to monetise.

“We are seeing that among companies that provide technology solutions. They are starting  to embed AI, and there’s an element of need for providing support for change management or staff training to enable adoption. There is no one silver bullet, however.”

This misalignment appears throughout healthcare, particularly healthcare I.T. Trakhtenberg offers a telling example from his current work:

“I’m working on a project right now with a client that is trying to transition its technology offering in hospitals through a SaaS system, and they can’t figure out a way to charge for it. There is an underutilisation of various valuable pieces of software because the willingness to pay varies.”

“Fundamentally, there’s a lot of opportunity in these technologies — but supporting the change management that is required is a key hurdle, because for most providers there are so many complexities. If you have workflows that exist, if you are breaking a workflow, you have to make it easy to do something different and there has to be a clear reason for doing it differently.”

Trakhtenberg continues with an even more concrete example from emergency care:

“If you have a new technology, let’s say a new AI technology that helps triage patients at the ER, you might run into the problem that you have actually [according to the AI] been admitting too many patients, and that’s the whole point [of such a system, to more accurately assess risk]… but then what do you do? Some of the doctors don’t feel comfortable saying, ‘Yeah, you can just go home. You probably don’t have a heart attack [having been assessed by the AI].’

“Or what about from the administrator perspective? They are losing revenue and the logic is ‘yes we can fill beds with heads as long as there’s a line, right?’

“So the incentives are actually misaligned. It is vital to understand these kinds of barriers and proactively plan to ensure that the technology is adopted and your new care delivery model delivers satisfaction and the results that we expect.”

The critical launch phase, and anticipating barriers before they arise

For healthcare organisations planning product or service launches, understanding potential obstacles before they arise is of paramount importance.

“For a lot of organisations, what they don’t spend enough time thinking about as they prepare to bring something to market is a deep enough understanding of the barriers to adoption and what issues they should expect once the product is in market,” he explains. 

“If you do your homework you can get a lot of the way there, but a lot of people don’t do this enough. They assume that if they’ve created something that’s great, it’s going to be used, and that’s just not so.”

 

Lessons in innovation for the healthcare sector from other industries

Healthcare organisations often struggle to apply innovations from other sectors  — something Trakhtenberg sees as a missed opportunity.

“This is a really interesting question because in some ways I would argue that healthcare thinks of itself as special and assumes that you can’t learn as much as you can from outside of the sector,” he notes. 

“We’ve had situations where for various clients, we’ve used analogues to help think through where things can move, especially things like monetisation or innovating in the digital space, because healthcare innovation of digital is much slower for good reason.

“There’s often an excuse in healthcare of ‘we’re too regulated, it’s too complicated, things don’t work the same way.’ And there’s a lot of truth to it, but the willingness to actually ask questions and try new things and challenge existing models could be better. While there are innovators who are doing this successfully, I would encourage people to think: ‘What can we learn and how can we apply these lessons?’”

 

Regulation and Europe’s position in the innovation race

Is Europe well-positioned for healthcare innovation compared to other regions? Trakhtenberg offers a nuanced view:

“If you think about where most of the innovation in healthcare has come from, it hasn’t in recent years been from Europe. There are some important innovators in pharma in Europe, for example, but on the medtech side very few are in Europe, almost none to be honest, almost all of them are in the US.”

However, he sees structural advantages in European healthcare systems for certain types of innovation:

“I think I would argue Europe is actually well positioned to innovate on a lot of things, because one of the things that we struggle with in healthcare innovation in the US is a crazy, complicated reimbursement structure. In a lot of European health systems it is an integrated payer-provider for most of it. It’s a public system that actually enables in many ways a system for innovating technologies that have long-term benefits but short-term costs.”

Jackson reflects that Europe’s fragmentation when compared to larger markets such as the US also presents specific challenges:

“I think it’s interesting to reflect on the European project. Is it really a single market or not? I think if you’re selling a new drug, Europe is one market — there’s lots of different countries, but they all have to play with the same EMA regulations. But for healthcare providers, is it really one market? If you had a new system for back treatments or spine therapy and you wanted to roll out some specialty clinics in the US, you could just roll that out across the 320 million population. In Europe, that would be much harder.”

He is also keen to explore blockers to innovation on a system level, for example in healthcare systems which through their structures or size can suppress or drown out innovation, and the importance of encouraging competition and patient choice even with public or single-payer systems. Jackson used the lack of competition across European regions, for example, in securing patients and reimbursement.

“One type of regulation is just how the healthcare system is organised. For example, is there competition for patients or does every system have effectively a monopoly on their local area? And when you have a lack of competition for patients and effectively a single provider within a region or city, then that stifles innovation because there is less need to try to change and adapt.

“If another part of the country is doing it better, you’re not forced to try to catch up because you’ve still got your patients and you still have your system.”

“In theory, it’s more efficient if everybody does exactly the same thing, you just have one system, everybody buys the same piece of equipment, and everybody does it the same way — but it also risks stifling innovation and performance because there’s just less urgency to change and update and be the best you possibly can be.”

When asked where the most innovation is happening in healthcare services, in Europe and beyond, Jackson emphasises that the easiest opportunities are operational:

“It’s probably in making the healthcare system more efficient,” he explains. “For example, systems and services within hospitals such as pharmacy automation or systems to improve nursing efficiency, so that they can spend more time with patients.”

 

Private equity’s role as an innovation catalyst

Private equity has become increasingly important in healthcare services, ensuring there is sufficient financing for an increasingly more capital-intensive system. Both consultants see PE as largely positive for healthcare  innovation.

“If you introduce more market forces, you will have more innovation, period,” says Trakhtenberg. “Private equity has definitely been a driver of innovation. The reality is that they push the envelope on the definition of what’s possible in the rollups of providers and aggregating them, finding ways to reduce costs and drive profitability.”

He notes that PE firms also bring much-needed business discipline:

“In the news sometimes PE involvement in healthcare receives negative attention which is not altogether surprising, but seeing it at work you do see a lot of innovation and willingness to invest in technology. In a lot of cases providers are not running organisations nearly of their scale in terms of the sophistication of their IT systems.”

Jackson emphasises PE’s role in creating an innovation ecosystem:

“In order for innovation to flourish you need liquidity, and you need people to make money, very simply. You need people to have exits and liquidity because that’s what creates an innovation ecosystem. When you have innovators that create new businesses, exit those, get paid out, what happens is they will recycle that wealth into other new ventures. That’s how innovation ecosystems get created, but you need liquidity and wealth creation in order for that to happen, and private equity can be an important part of supporting both.”

 

From one-hit wonder to enduring success

How can healthcare organisations turn initial innovation success into lasting advantage? Jackson returns to the challenge of transition, and the opportunities for healthcare companies that are agile:

“It’s such a different challenge — the ability to pivot — because when you’re in the development stage bringing a product to market there’s a whole different set of challenges. 

“You need to drive against the different milestones, ensure that you’re getting over the clinical challenges, figure out the adoption challenges, target your customers, anticipate competitive reactions, deal with regulatory issues. 

“You’ve got to work through a whole set of challenges, and it’s less about profit or anything else. It’s just more about getting it done and bringing it to market. 

“Suddenly, then, you’ve launched a product, and there’s a whole different set of challenges — you’ve actually got to get the thing out the door each month and do it cost efficiently and generate cash flow and revenue and profit.”

Trakhtenberg adds an important distinction between breakthrough and incremental innovation:

“A lot of the time the success of what you need to bring something to market, as Stuart described, is around breakthrough innovation. You’re creating something meaningfully new, and the talent base — the people and the leadership that you need to do that — is a little different than that which you need for the incremental innovations, once it’s already in the  market. 

“Continuing to innovate and support the business, frankly, is a little bit boring and it takes a different skill set oftentimes from a leadership standpoint — certainly a different organisational focus and capabilities. As Stuart pointed to, it’s hard for the same people to do both.”

 

Key takeaways for leaders looking to scale through innovation

Stuart has been with L.E.K.Consulting from when it was a single-figure-team minnow to the global consultancy of more than 2,000 consultants spread across the Americas, Asia Pacific and Europe. We asked him what lessons he has taken in innovation and service development from that journey that could help today’s healthcare leaders.

“I believe you need to establish core principles that are enduring whilst recognising what needs to adapt over time. For us, fundamental principles included delivering exceptional work for clients, ensuring their satisfaction to generate future business, and creating an environment conducive to long-term career development. However, some approaches have evolved significantly. We began with a personal networking model similar to McKinsey and Bain, relying entirely on word of mouth rather than formal marketing.

“That has changed as organisations increasingly purchase based on expertise — they want to know what you understand about specific areas, such as heart disease and emerging technologies. Navigating the tension between what to preserve and what to relinquish, though it may sound trivial, is a crucial challenge organisations must address over decades.”

With healthcare innovation becoming an existential imperative, organisations must find ways to adapt that become systemic and embedded in their operations and culture.

For Jackson and Trakhtenberg, their strategic approach — which is detailed in their forthcoming book — can help healthcare service providers transform often daunting innovation odds into something much more favourable: predictable winners.

They will be exploring these questions of innovation, adaptation, and growth strategy at this year’s HBI 2025 conference on March 24-26th in Paris, at the Innovation, Growth and the Barriers to Success: Breakfast Briefing on Tuesday March 25th. Limited tickets remain available.

 

We would welcome your thoughts on this story. Email your views to Chris O'Donnell or call 0207 183 3779.